Stock Option Agreement - Alliedsignal Inc. and Honeywell Inc.

By
Honeywell International Inc.

STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this 'Agreement'), dated as of June
4, 1999, between ALLIEDSIGNAL INC., a Delaware corporation ('Parent'), and
HONEYWELL INC., a Delaware corporation (the 'Company').
W I T N E S S E T H :
WHEREAS, Parent and the Company are concurrently with the
execution and delivery of this Agreement entering into an Agreement and
Plan of Merger (the 'Merger Agreement') pursuant to which, among other
things, Merger Subsidiary will merge with and into the Company on the terms
and subject to the conditions stated therein; and
WHEREAS, in order to induce the Company to enter into the Merger
Agreement and as a condition for the Company's agreeing so to do, Parent
has granted to the Company the Stock Option (as hereinafter defined), on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and in the Merger Agreement, and for other good
and valuable consideration, the adequacy of which is hereby acknowledged,
the parties hereto agree as follows:
Section 1. Definitions. Capitalized terms used and not defined
herein have the respective meanings assigned to them in the Merger
Agreement.
Section 2. Grant of Stock Option. Parent hereby grants to the
Company an irrevocable option (the 'Stock Option') to purchase, on the
terms and subject to the conditions hereof, for $58.375 per share (the
'Exercise Price') in cash, up to 109,308,537 fully paid and non-assessable
shares (the 'Option Shares') of Parent's common stock, par value $1.00 per
share (the 'Common Stock'). The Exercise Price and number of Option Shares
shall be subject to adjustment as provided in Section 5 below.
Section 3. Exercise of Stock Option.
(a) The Company may, subject to the provisions of this
Section 3, exercise the Stock Option, in whole or in part, at any time or
from time to time, after the occurrence of a Parent Trigger Event (defined
below) and prior to the Termination Date. 'Termination Date' shall mean,
subject to Section 9(a), the earliest of (i) the Effective Time of the
Merger, (ii) 120 days after the date full payment contemplated by Section
10.6(a) of the Merger Agreement is made by Parent to the Company
thereunder, (iii) the date of the termination of the Merger Agreement so
long as, in the case of this clause (iii), no Parent Trigger Event has
occurred or could still occur pursuant to Section 10.6(a) of the Merger
Agreement or (iv) the first anniversary of the date of termination of the
Merger Agreement. Notwithstanding the occurrence of the Termination Date,
the Company shall be entitled to purchase Option Shares pursuant to any
exercise of the Stock Option, on the terms and subject to the conditions
hereof, to the extent the Company exercised the Stock Option prior to the
occurrence of the Termination Date. A 'Parent Trigger Event' shall mean an
event the result of which is that the total fee or fees required to be paid
by Parent to the Company pursuant to Section 10.6(a) of the Merger
Agreement is equal to $350 million.
(b) The Company may purchase Option Shares pursuant to the
Stock Option only if all of the following conditions are satisfied: (i) no
preliminary or permanent injunction or other order issued by any federal or
state court of competent jurisdiction in the United States shall be in
effect prohibiting delivery of the Option Shares, (ii) any waiting period
applicable to the purchase of the Option Shares under the HSR Act shall
have expired or been terminated, and (iii) any prior notification to or
approval of any other regulatory authority in the United States or
elsewhere required in connection with such purchase shall have been made or
obtained, other than those which if not made or obtained would not
reasonably be expected to result in a significant detriment to Parent and
its Subsidiaries, taken as a whole.
(c) If the Company shall be entitled to and wishes to
exercise the Stock Option, it shall do so by giving Parent written notice
(the 'Stock Exercise Notice') to such effect, specifying the number of
Option Shares to be purchased and a place and closing date not earlier than
three business days nor later than 10 business days from the date of such
Stock Exercise Notice. If the closing cannot be consummated on such date
because any condition to the purchase of Option Shares set forth in Section
3(b) has not been satisfied or as a result of any restriction arising under
any applicable law or regulation, the closing shall occur five days (or
such earlier time as the Company may specify) after satisfaction of all
such conditions and the cessation of all such restrictions.
(d) So long as the Stock Option is exercisable pursuant to
the terms of Section 3(a), the Company may elect to send a written notice
to Parent (the 'Cash Exercise Notice') specifying a date not later than 20
business days and not earlier than 5 business days following the date such
notice is given on which date Parent shall pay to the Company in exchange
for the cancellation of the relevant portion of the Stock Option an amount
in cash equal to the Spread (as hereinafter defined) multiplied by all or
such relevant portion of the Option Shares subject to the Stock Option as
the Company shall specify. As used herein, 'Spread' shall mean the excess,
if any, over the Exercise Price of the higher of (x) if applicable, the
highest price per share of Common Stock paid or proposed to be paid by any
Person pursuant to any Acquisition Proposal relating to Parent (the
'Proposed Alternative Transaction Price') or (y) the average of the closing
prices of the shares of Common Stock on the principal securities exchange
or quotation system on which the Common Stock is then listed or traded as
reported in The Wall Street Journal (but subject to correction for
typographical or other manifest errors in such reporting) for the five
consecutive trading days immediately preceding the date on which the Cash
Exercise Notice is given (the 'Average Market Price'). If the Proposed
Alternative Transaction Price includes any property other than cash, the
Proposed Alternative Transaction Price shall be the sum of (i) the fixed
cash amount, if any, included in the Proposed Alternative Transaction Price
plus (ii) the fair market value of such other property. If such other
property consists of securities with an existing public trading market, the
average of the closing prices (or the average of the closing bid and asked
prices if closing prices are unavailable) for such securities in their
principal public trading market on the five trading days ending five days
prior to the date on which the Cash Exercise Notice is given shall be
deemed to equal the fair market value of such property. If such other
property includes anything other than cash or securities with an existing
public trading market, the Proposed Alternative Transaction Price shall be
deemed to equal the Average Market Price. Upon exercise of its right
pursuant to this Section 3(d) and the receipt by the Company of the
applicable cash amount with respect to the Option Shares or the applicable
portion thereof, the obligations of Parent to deliver Option Shares
pursuant to Section 3(e) shall be terminated with respect to the number of
Option Shares specified in the Cash Exercise Notice. The Spread shall be
appropriately adjusted, if applicable, to give effect to Section 5.
(e) (i) At any closing pursuant to Section 3(c) hereof, the
Company shall make payment to Parent of the aggregate purchase price for
the Option Shares to be purchased and Parent shall deliver to the Company a
certificate representing the purchased Option Shares, registered in the
name of the Company or its designee and (ii) at any closing pursuant to
Section 3(d) hereof, Parent will deliver to the Company cash in an amount
determined pursuant to Section 3(d) hereof. Any payment made by the Company
to Parent, or by Parent to the Company, pursuant to this Agreement shall be
made by wire transfer of immediately available funds to a bank designated
by the party receiving such funds, provided that the failure or refusal by
Parent to designate such a bank account shall not preclude the Company from
exercising the Stock Option.
(f) Certificates for Common Stock delivered at the closing
described in Section 3(c) hereof shall be endorsed with a restrictive
legend which shall read substantially as follows:
'The transfer of the shares represented by this
certificate is subject to resale restrictions arising
under the Securities Act of 1933, as amended.'
It is understood and agreed that the above legend shall be
removed by delivery of substitute certificate(s) without this reference (i)
if the Company shall have delivered to Parent a copy of a no-action letter
from the staff of the Securities and Exchange Commission, or a written
opinion of counsel, in form and substance reasonably satisfactory to
Parent, to the effect that such legend is not required for purposes of, or
resale may be effected pursuant to an exemption from registration under,
the Securities Act or (ii) in connection with any sale registered under the
Securities Act. In addition, these certificates shall bear any other legend
as may be required by applicable law.
Section 4. Representations of the Company. The Company hereby
represents and warrants to Parent that any Option Shares acquired by the
Company upon the exercise of the Stock Option will not be, and the Stock
Option is not being, acquired by the Company with the intention of making a
public distribution thereof, other than pursuant to an effective
registration statement under the Securities Act or otherwise in compliance
with the Securities Act.
Section 5. Adjustment upon Changes in Capitalization or Merger.
(a) In the event of any change in the outstanding shares of
Common Stock by reason of a stock dividend, stock split, reverse stock
split, split-up, merger, consolidation, recapitalization, combination,
conversion, exchange of shares, extraordinary or liquidating dividend or
similar transaction which would effect the Company's rights hereunder, the
type and number of shares or securities purchasable upon the exercise of
the Stock Option and the Exercise Price shall be adjusted appropriately,
and proper provision will be made in the agreements governing such
transaction, so that the Company will receive upon exercise of the Stock
Option a number and class of shares or amount of other securities or
property that the Company would have received in respect of the Option
Shares had the Stock Option been exercised immediately prior to such event
or the record date therefor, as applicable. In no event shall the number of
shares of Common Stock subject to the Stock Option exceed 19.9% of the
number of shares of Common Stock issued and outstanding at the time of
exercise (without giving effect any shares subject or issued pursuant to
the Stock Option).
(b) Without limiting the foregoing, whenever the number of
Option Shares purchasable upon exercise of the Stock Option is adjusted as
provided in this Section 5, the Exercise Price shall be adjusted by
multiplying the Exercise Price by a fraction, the numerator of which is
equal to the number of Option Shares purchasable prior to the adjustment
and the denominator of which is equal to the number of Option Shares
purchasable after the adjustment.
(c) Without limiting or altering the parties' rights and
obligations under the Merger Agreement, in the event that Parent enters
into an agreement (i) to consolidate with or merge into any Person, other
than the Company or one of its Subsidiaries, and Parent will not be the
continuing or surviving corporation in such consolidation or merger, (ii)
to permit any Person, other than the Company or one of its Subsidiaries, to
merge into Parent and Parent will be the continuing or surviving
corporation, but in connection with this merger, the shares of Common Stock
outstanding immediately prior to the consummation of this merger will be
changed into or exchanged for stock or other securities of Parent or any
other Person or cash or any other property, or the shares of Common Stock
outstanding immediately prior to the consummation of such merger will,
after such merger, represent less than 50% of the outstanding voting
securities of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its assets to any Person, other than the
Company or one of its Subsidiaries, then, and in each such case, the
agreement governing this transaction shall make proper provision so that
the Stock Option will, upon the consummation of any such transaction and
upon the terms and conditions set forth herein, be converted into, or
exchanged for, an option with identical terms appropriately adjusted to
acquire the number and class of shares or other securities or property that
the Company would have received in respect of Option Shares had the Stock
Option been exercised immediately prior to such consolidation, merger, sale
or transfer or the record date therefor, as applicable, and will make any
other necessary adjustments. Parent shall take such steps in connection
with such consolidation, merger, liquidation or other transaction as may be
reasonably necessary to assure that the provisions hereof shall thereafter
apply as nearly as possible to any securities or property thereafter
deliverable upon exercise of the Stock Option.
Section 6. Further Assurances; Remedies.
(a) Parent agrees to maintain, free from preemptive rights,
sufficient authorized but unissued or treasury shares of Common Stock so
that the Stock Option may be fully exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights of third parties to
purchase shares of Common Stock from Parent, and to issue the appropriate
number of shares of Common Stock pursuant to the terms of this Agreement.
All of the Option Shares to be issued pursuant to the Stock Option, upon
issuance and delivery thereof pursuant to this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable, and will be
delivered free and clear of all claims, liens, charges, encumbrances and
security interests (other than those created by this Agreement).
(b) Parent agrees not to avoid or seek to avoid (whether by
charter amendment or through reorganization, consolidation, merger,
issuance of rights, dissolution or sale of assets, or by any other
voluntary act) the observance or performance of any of the covenants,
agreements or conditions to be observed or performed hereunder by Parent.
(c) Parent agrees that promptly after the occurrence of a
Parent Trigger Event it shall take all actions as may from time to time be
required (including (i) complying with all applicable premerger
notification, reporting and waiting period requirements under the HSR Act
and (ii) in the event that prior notification to or approval of any other
regulatory authority in the United States or elsewhere is necessary before
the Stock Option may be exercised, complying with its obligations
thereunder and cooperating with the Company in the Company's preparing and
processing the required notices or applications) in order to permit the
Company to exercise the Stock Option and purchase Option Shares pursuant to
such exercise.
(d) The parties agree that the Company would be irreparably
damaged if for any reason Parent failed, in breach of its obligations
hereunder, to issue any of the Option Shares (or other securities or
property deliverable pursuant to Section 5 hereof) upon exercise of the
Stock Option or to perform any of its other obligations under this
Agreement, and that the Company would not have an adequate remedy at law
for money damages in such event. Accordingly, the Company shall be entitled
to specific performance and injunctive and other equitable relief to
enforce the performance of this Agreement by Parent. Accordingly, if the
Company should institute an action or proceeding seeking specific
enforcement of the provisions hereof, Parent hereby waives the claim or
defense that the Company has an adequate remedy at law and hereby agrees
not to assert in any such action or proceeding the claim or defense that
such a remedy at law exists. Parent further agrees to waive any
requirements for the securing or posting of any bond in connection with
obtaining any such equitable relief. This provision is without prejudice to
any other rights that the Company may have against Parent for any failure
to perform its obligations under this Agreement.
Section 7. Listing of Option Shares. Promptly after the
occurrence of a Parent Trigger Event and from time to time thereafter if
necessary, Parent will apply to list all of the Option Shares subject to
the Stock Option on the NYSE and will use its reasonable best efforts to
obtain approval of such listing as soon as practicable.
Section 8. Registration of the Option Shares.
(a) If, within two years of the exercise of the Stock
Option, the Company requests Parent in writing to register under the
Securities Act any of the Option Shares received by the Company hereunder,
Parent will use its reasonable best efforts to cause the offering of the
Option Shares so specified in such request to be registered as soon as
practicable so as to permit the sale or other distribution by the Company
of the Option Shares specified in its request (and to keep such
registration in effect for a period of at least 90 days), and in connection
therewith Parent shall prepare and file as promptly as reasonably possible
(but in no event later than 60 days from receipt of the Company's request)
a registration statement under the Securities Act to effect such
registration on an appropriate form, which would permit the sale of the
Option Shares by the Company in accordance with the plan of disposition
specified by the Company in its request. Parent shall not be obligated to
make effective more than two registration statements pursuant to the
foregoing sentence; provided, however, that Parent may postpone the filing
of a registration statement relating to a registration request by the
Company under this Section 8 for a period of time (not in excess of 90
days) if in Parent's reasonable, good faith judgment such filing would
require the disclosure of material information that Parent has a bona fide
business purpose for preserving as confidential (but in no event shall
Parent exercise such postponement right more than once in any twelve month
period).
(b) Parent shall notify the Company in writing not less than
10 days prior to filing a registration statement under the Securities Act
(other than a filing on Form S-4 or S-8 or any successor form) with respect
to any shares of Common Stock. If the Company wishes to have any portion of
its Option Shares included in such registration statement, it shall advise
Parent in writing to that effect within two business days following receipt
of such notice, and Parent will thereupon include the number of Option
Shares indicated by the Company under such Registration Statement; provided
that if the managing underwriter(s) of the offering pursuant to such
registration statement advise Parent that in their opinion the number of
shares of Common Stock requested to be included in such registration
exceeds the number which can be sold in such offering on a commercially
reasonable basis, priority shall be given to securities intended to be
registered by Parent for its own account and, thereafter, Parent shall
include in such registration Option Shares requested by the Company to be
included therein pro rata with the shares of Common Stock intended to be
included therein by other stockholders of Parent.
(c) All expenses relating to or in connection with any
registration contemplated under this Section 8 and the transactions
contemplated thereby (including all filing, printing, reasonable
professional, roadshow and other fees and expenses relating thereto) will
be at Parent's expense except for underwriting discounts or commissions and
brokers' fees. Parent and the Company agree to enter into a customary
underwriting agreement with underwriters upon such terms and conditions as
are customarily contained in underwriting agreements with respect to
secondary distributions. Parent shall indemnify the Company, its officers,
directors, agents, other controlling persons and any underwriters retained
by the Company in connection with such sale of such Option Shares in the
customary way, and shall agree to customary contribution provisions with
such persons, with respect to claims, damages, losses and liabilities (and
any expenses relating thereto) arising (or to which the Company, its
officers, directors, agents, other controlling persons or underwriters may
be subject) in connection with any such offer or sale under the federal
securities laws or otherwise, except for information furnished in writing
by the Company or its underwriters to Parent. The Company and its
underwriters, respectively, shall indemnify Parent to the same extent with
respect to information furnished in writing to Parent by the Company and
such underwriters, respectively.
Section 9. Miscellaneous.
(a) Extension of Exercise Periods. The periods during which
the Company may exercise its rights under Sections 2 and 3 hereof shall be
extended in each such case at the request of the Company to the extent
necessary to avoid liability by the Company under Section 16(b) of the
Exchange Act by reason of such exercise.
(b) Amendments; Entire Agreement. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. This
Agreement, together with the Merger Agreement (including any exhibits and
schedules thereto), contains the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
and contemporaneous agreements and understandings, oral or written, with
respect to such transactions.
(c) Notices. All notices, requests and other communications
to either party hereunder shall be in writing (including facsimile or
similar writing) and shall be given,
if to Parent, to:
AlliedSignal Inc.
101 Columbia Road
P.O. Box 3000
Morristown, NJ 07962-2496
Attention: Peter M. Kreindler
Senior Vice President,
General Counsel
and Secretary
Facsimile No.: (973) 455-4217
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004-1980
Attention: Arthur Fleischer, Jr., Esq.
Charles M. Nathan, Esq.
Facsimile No.: (212) 859-4000
if to the Company, to:
Honeywell Inc.
Honeywell Plaza
Minneapolis, MN 55408
Attention: Edward D. Grayson
Vice President and General Counsel
Facsimile No.: (612) 951-3859
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022-3897
Attention: Peter Allan Atkins, Esq.
David J. Friedman, Esq.
Facsimile No.: (212) 735-2000
or to such other address or facsimile number as either party may hereafter
specify for the purpose by notice to the other party hereto. Each such
notice, request or other communication shall be effective (i) if given by
facsimile, when such facsimile is transmitted to the facsimile number
specified in this Section 9 and the appropriate facsimile confirmation is
received or (ii) if given by any other means, when delivered at the address
specified in this Section 9.
(d) Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement, except as otherwise
specifically provided herein and without limiting anything contained in the
Merger Agreement.
(e) Severability. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without
regard to principles of conflicts of law.
(g) Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby or
thereby may be brought in any federal or state court located in the State
of Delaware, and each of the parties hereby consents to the jurisdiction of
such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such
court or that any such suit, action or proceeding which is brought in any
such court has been brought in an inconvenient forum. Process in any such
suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court.
Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 9(c) shall be deemed effective service
of process on such party.
(h) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be an original, but all of which
together shall constitute one and the same Agreement.
(i) Headings. The section headings herein are for
convenience only and shall not affect the construction hereof.
(j) Assignment. This Agreement shall be binding upon each
party hereto and such party's successors and assigns. This Agreement shall
not be assignable by Parent, but may be assigned by the Company in whole or
in part to any direct or indirect wholly-owned subsidiary of the Company,
provided that the Company shall remain liable for any obligations so
assigned.
(k) Survival. All representations, warranties and covenants
contained herein shall survive the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby.
(l) Time of the Essence. The parties agree that time shall
be of the essence in the performance of obligations hereunder.
(m) Public Announcement. The Company and Parent will consult
with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and shall not issue any press release or make any public statement
without the prior consent of the other party, which shall not be
unreasonably withheld. Notwithstanding the foregoing, any such press
release or public statement as may be required by applicable law or any
listing Agreement with any national securities exchange, may be issued
prior to such consultation, if the party making the release or statement
has used its reasonable efforts to consult with the other party.
Section 10. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement or
the Merger Agreement, in no event shall the Company's Total Profit (as
defined below) exceed $400 million (the 'Maximum Amount') and, if it
otherwise would exceed such Maximum Amount, the Company at its sole
election may (i) pay cash to Parent, (ii) deliver to Parent for
cancellation Option Shares previously purchased by the Company, or (iii)
any combination thereof, so that the Company's actually realized Total
Profit (as defined below) shall not exceed the Maximum Amount after taking
into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement,
the Stock Option may not be exercised for a number of Option Shares as
would, as of the date of the Stock Exercise Notice or Cash Exercise Notice,
as applicable, result in a Notional Total Profit (as defined below) of more
than the Maximum Amount and, if exercise of the Stock Option otherwise
would result in the Notional Total Profit exceeding such amount, the
Company, at its discretion, may (in addition to any of the actions
specified in Section 10(a) above) increase the Exercise Price for that
number of Option Shares set forth in the Stock Exercise Notice or Cash
Exercise Notice, as applicable, so that the Notional Total Profit shall not
exceed the Maximum Amount; provided, that nothing in this sentence shall
restrict any exercise of the Stock Option permitted hereby on any
subsequent date at the Exercise Price set forth in Section 2 hereof.
(c) As used herein, the term 'Total Profit' shall mean the
aggregate amount (before taxes) of the following: (i) the cash amount
actually received by the Company pursuant to Section 10.6(a) of the Merger
Agreement less any repayment by the Company to Parent pursuant to Section
10(a)(i) hereof, (ii) (x) the net cash amounts or the fair market value of
any property received by the Company pursuant to the sale of Option Shares
(or of any other securities into or for which such Option Shares are
converted or exchanged), less (y) the Company's purchase price for such
Option Shares (or other securities) plus (iii) the aggregate amounts
received by the Company pursuant to Section 3(d).
(d) As used herein, the term 'Notional Total Profit' with
respect to any number of Option Shares as to which the Company may propose
to exercise the Stock Option shall mean the Total Profit determined as of
the date of the Stock Exercise Notice or Cash Exercise Notice, as
applicable, assuming that the Stock Option was exercised on such date for
such number of Option Shares and assuming that such Option Shares, together
with all other Option Shares previously acquired upon exercise of the Stock
Option and held by the Company and its affiliates as of such date, were
sold for cash at the closing price on the NYSE for the Common Stock as of
the close of business on the preceding trading day (less customary
brokerage commissions).
Section 11. Restrictions on Certain Actions; Covenants of the
Company. From and after the date of exercise of the Stock Option (other
than an exercise contemplated by Section 3(d) hereof), in whole or part,
and for as long as the Company owns shares of Common Stock acquired
pursuant to the exercise of the Stock Option:
(a) Without the prior consent of the Board of Directors of
Parent, the Company will not, and will not permit any of its affiliates to:
(i) acquire or agree, offer or propose to acquire, ownership
(including, but not limited to, beneficial ownership as defined
in Rule 13d-3 under the Exchange Act) of more than 25% of any
class of Voting Securities (as defined in below), or any rights
or options to acquire such ownership (including from a third
party);
(ii) propose a merger, consolidation or similar transaction
involving Parent;
(iii)offer or propose to purchase, lease or otherwise
acquire all or a substantial portion of the assets of Parent;
(iv) solicit or participate in the solicitation of any
proxies or consents with respect to the securities of Parent;
(v) enter into any agreements or arrangements with any third
party with respect to any of the foregoing; or
(vi) request permission to do any of the foregoing or any
permission to make any public announcement with respect to any of
the foregoing; and
(b) (i) The Company agrees to be present in person or to be
represented by proxy at all stockholder meetings of Parent so that all
shares of Voting Securities beneficially owned by it or its affiliates may
be counted for the purpose of determining the presence of a quorum at such
meetings.
(ii) The Company agrees to vote or cause to be voted all
Voting Securities beneficially owned by it or its affiliates
proportionately with the votes cast by all other stockholders
present and voting.
(iii)The provisions of this Section 11 shall terminate at
such time as the Stock Option granted hereby expires without
having been exercised in whole or part. The provisions of this
Section 11 shall not apply to actions taken pursuant to the
Merger Agreement. 'Voting Securities' means the shares of Common
Stock, preferred stock and any other securities of Parent
entitled to vote generally for the election of directors or any
other securities (including, without limitation, rights and
options), convertible into, exchangeable into or exercisable for,
any of the foregoing (whether or not presently exercisable,
convertible or exchangeable).
IN WITNESS WHEREOF, Parent and the Company have caused this
Agreement to be duly executed as of the day and year first above written.
ALLIEDSIGNAL INC.
By:/s/ Lawrence A. Bossidy
-----------------------
Name: Lawrence A. Bossidy
Title: Chairman and Chief Executive
Officer
HONEYWELL INC.
By: /s/ Michael R. Bonsignore
-------------------------
Name: Michael R. Bonsignore
Title: Chairman and Chief Executive
Officer